Cash Flow Forecast & Projection to Keep Your Business Afloat

How to Forecast Cash Flow

As the saying goes, cash flow is king. In these uncertain times where the full economic effects of the COVID-19 pandemic are still unknown, managing your company’s cash flow has never been more important. While every company wants to see positive cash flow, issues related to this were among the top two reasons why startups were failing.

But for you to properly manage your cash flow, you need to conduct a forecast. Without creating a cash flow forecast for the next one, three, six, or 12 months, how can you make important business decisions such as increasing inventory or scaling up your staff? It would be like driving with your eyes closed.

Of course, the problem isn’t that business owners discount the value of cash flow forecasting. It’s not just about knowing the various forecasting methods and using data in an easy and convenient manner. It also takes time to learn — time that businesses are often short of — and can this even be done as we work from home?

1. Simple Cash Flow Forecasting Shortcuts

Technology gives you access to your data and cash flow visibility through tools and apps. OCBC’s business banking platform Velocity, for instance, comes equipped with new Business Financial Management capabilities that allows you to easily see red flags and pitfalls when it comes to your cash flow.

Alternatively, popular accounting software such as QuickBooks and Xero can also help you generate cash flow forecasts easily.

2. QuickBooks

A forecast cash flow model is more than just tracking what comes in or goes out; it also includes creating scenarios that factor in unforeseen circumstances. Inputs can also be adjusted to tweak the forecast by making it more conservative or optimistic, depending on the economic situation.

If you have QuickBooks, follow this official guide to create a cash flow forecast for your business in five simple steps.

3. Xero

In order for your business to reap profits, inflows will need to be greater than outflows, but it’s inevitable that some months will be better than others. Tracking your company’s cash flow enables you to see the patterns as these values change over time.

If you’re using Xero, they offer some tips on how you can make minor adjustments to your business to regulate your cash flow.

Other Cash Flow Forecast Tools

If these sound too complicated, not to worry; there are many add-on apps that can integrate with either of the abovementioned software. One such app is Spotlight Reporting, which has advanced forecasting capabilities that will prepare your business for multiple ‘what if’ scenarios. The app also has the ability to account for loan amortisations and tax schedules.

Cash Flow Forecast With OCBC Start Digital Bundles

Keen to get started on an online accounting solution? Consider OCBC’s Start Digital bundles that provide your business with up to 12 months free subscription for selected apps.